Market Timing

"Every man gets a narrower and narrower field of knowledge in which he
must be an expert in order to compete with other people. The specialist knows
more and more about less and less and finally knows everything about nothing." ~
Konrad Lorenz 1903-1989, Austrian Zoologist, Ethnologist

We are gratified to know that the markets have followed our intermediate time
frame expectations almost to the T.

We are expecting a pull back in the short term time frames; this might
or might not materialise as short term timing is the most unpredictable time
frame to deal with; if it does transpire risk takers and futures players
can buy calls on the Dow, QQQQ.s, OEX and SPX indices; futures players can
go long Dow or SP 500 futures contracts. Wait for at least a 600 point pull
back from the current level.Market update Oct 16, 2007

This was sent out early on Oct 17th. The Dow moved up traded as high as 14012
and thus if you subtract 600 points from this level you get 13412; the Dow
traded as low as 13407 and thus it traded within our suggested entry range.

The only area that has been somewhat tricky to predict has been the very short
term time frame and indeed this to be expected as markets are nothing but
a manifestation of insanity in real time. As we have stated before timing
insanity is at best tricky and at worst a ludicrous to treacherous endeavour.
It's for this reason we do not place too much emphasis on short term timing
and for that matter long term market timing too. What we look for are signs
of bottoming or topping action and when we see this we either bail out or start
to look for new attractive entry points.

Thus the market timing we do attempt here under the Market commentary section
of the Market update should be viewed as bonus feature that we provide to option
and futures players who want to go long or short via popular indices. Our main
goal is to just warn our subscribers when we feel the markets are due for a
pull back or a run up; thus the ones that are nervous can then take some profits
of the table and use the pull backs to re open the positions they previously
closed out. We also look forward to pull backs because in almost every case
they are over done and they usually produce some very lovely buying opportunities.
One day we expect that one of these stated pull backs is going to be rather
extreme in nature. When we feel we have reached that point we will most likely
close out at least 83%to 90% of our positions and wait for the dust to settle
before re opening them.

At this point in time we don't feel that we are close to a massive correction;
however we do feel that another correction is in the works and if and when
it transpires it will simply provide another buying opportunity. The word crisis in
Chinese is composed of two characters one represents danger and the other
opportunity. Our take on this is that a crisis is dangerous for those who
are desperately seeking safety and very lucrative for those who with open and
clear eyes examine the situation for what it really is. When one does this
one discovers lot's of lovely hidden gems just waiting to be picked up at incredibly
low prices.

One thing most players have to remember today is that the markets have become
even more wicked and tricky than ever before and the reason for this is that
individuals as a whole today are more wicked and treacherous than ever. Bottom
seekers have to wait even longer before a bottom formation starts to manifest
itself and vice versa. So if you are sitting there desperately waiting for
something to happen chances are that you will lose your patience and bail out
before it occurs. The best thing to do is to understand that nothing goes up
or down all the time and that eventually it will start to stabilise. Your job
as an unbiased, objective observer is to sit and wait patiently for this situation
to transpire. If you try to force something or push the markets into doing
something the only one falling of the cliff will be you. The markets listen
to no one, care about no one, respect no one and look to destroy everyone. The
market is essentially a reflection of your deepest fears staring you right
in the face and most people usually blink when this happens and or look the
other way. How many times have you seen traders get desperate or lose their
mind or rant and rave when a stock or an index is doing nothing but just moving
sideways; the answer is countless times. What have they gained other than increasing
their blood pressure and over all stress? Now if they were to jump around it
might be a good thing as they would be getting some exercise in the process
of losing their minds; at least on a physical level they would be in shape.

We at TI have long decided that to try to time a specific bottom or top is
like trying to hit the bull's eye while being blind folded and standing 1 kilometre
from the target. What we have always looked for is a bottoming process or a
topping process; once we see this we look for the very important mass psychology
factors to confirm that we are indeed close to a bottom or top. We either look
for mass greed or mass fear and when we see this we take action. That's how
we were able to buy palladium initially in the 140-180 ranges, Silver bullion
in the 4 dollar ranges, Gold in the 300 dollar ranges, Oil stocks when oil
was trading well below 35 dollars a barrel, uranium stocks before the main
move up started (here we jumped in and out of several 100% plus winners) and
the list goes on. Using this same technique we warned our subscribers of the
housing disaster as early as late 2003, the correction that took place a few
months ago in the Stock markets, buying the Franc in the 81 ranges, issuing
the statement several times in the past two years that the Canadian dollar
would one day trade on par with the US Dollar and so on. Notice that most
of the time we did not get in at the exact bottom or top but usually jumped
in a bit too early and jumped out a bit too early but we would rather be in
and out early then late and get killed in the process. Look at the chaps
that refused to listen and held onto their real estate; today they would give
anything to go back to 2004 and 2005 and be able to sell them at or close to
the top. Now these very same geniuses are going to have to wait maybe 9-11
years if not more before prices go back to what they used to be.

Our main point here is that riches come to those who seek it and poverty
to those who chase it. You don't need to be rich to make money but you
do need to have the mindset of the rich to do so. What do we mean by this?
Usually wealthy individuals are not desperate to make money; the reason being
that they already have enough to live well on and so anything extra is a
bonus. The key factor though is that they are relaxed and not in a rush;
that's what needs to be learned by most novice traders. Do not rush, do not
push for results, find an opportunity and let opportunity do the work for
you while you read a few good books and take time to study yourself. Point
and case when we first recommended palladium in the 140-180 ranges; it did
nothing for a long time after we bought and then when it initially moved,
it moved just a few dollars. However when it finally started to move it moved
like a rocket and in less then one year it had gone from under 180 to over
420 dollars. Was it not better to simply buy and wait after the main investment
criteria were fulfilled, that being that it had mounted a severe correction,
was putting in a bottom formation and most importantly the masses were ignoring
it? In fact almost no one was talking about it in late 2004 to early 2005.

One more note here; it's far more important to have the mindset of the rich
then simply riches for many individuals vault from poverty into riches and
then jump back into poverty even faster. These individuals failed to acquire
the right mind set. Finally is it really the money that makes you happy or
the perception that you have money. Look at it this way if you were locked
up in some place in a third world country with almost no money to spare and
just barely enough food to eat on a daily basis; would you then not consider
yourself rich if you were given a simple job, a car, house and a computer.
Hum the funny thins is that most people already have this and much more; the
sad part is that there are a lot of people in these 3rd world countries who
are struggling to survive on under a dollar a day. Riches just like happiness
are a state of mind. It's in our capacity as humans to change our perceptions
and in doing so immensely improve the state of our lives, yet most choose to
drivel in sorrow and misery.

Palladium still represents a wonderful buying opportunity and once again very
recently we recommended buying it in the 330 dollar ranges and note once again
it did nothing for awhile. In fact several times it traded well below our suggested
entry prices but then look how fast it has moved in a few short weeks. Remember
the saying we have at TI; opportunity is forever knocking but most people
forget to open the door in time and when they do open it they are usually waving
good bye instead of saying hello. Every disaster, ever painful situation
always brings forth wonderful opportunities; most people fail to see it because
they have been trained to focus on pain and misery and not on the resurrection
or the creation of something new. What is even sadder is that they focus on
this pain and misery and do nothing to alleviate it; if you are going to focus
on this area for heavens sake do something about it. At the very least try
to help yourself or those that are close to you but instead most people sit
there like donkey's, wailing and hoping that someone else takes pity on them
and tries to help them. In this way a lifetime is wasted in misery and pain
and inadvertently trying to drag in as many other innocent bystanders as possible
into this tragedy.

Keep in mind the saying that "misery loves company" to which we added "and
stupidity simply demands it." Why don't we say happiness loves company
or intelligence demands it because it's not true? Individuals usually do
not like winners they start to get jealous when someone talks about wining
or they feel upset when someone is unusually happy. The reason is simple
they are envious because they would like to be like this person but they
do not know how, correction, they do know how but they don't want to try.
Which brings us to another TI saying "life is not bad or good, life just
is; it's our perceptions that oscillate from bad to good."

Do not chastise yourself for past mistakes but learn from them and ask yourself
why you did what you did and then write this down in your trading journal.
The tragic part about most peoples lives is that they can dedicate so much
time preparing themselves for a specific career, so much time to study how
to invest (and usually fail but that's a different story), so much time to
learn to operate computers, cars and other mechanical gadgets but they take
so very little time to understand themselves; in fact it can be stated that
most people live and die without really knowing who there are and what they
want.

People are born happy and usually die miserably as they have forgotten all
the very basic tenets of what true happiness is all about. Remember the times
as child and young adult when you could laugh at almost anything and life was
to some extent a joy. Now look at where most people are; they are sloughing
away to pay for things they don't really need, to drive huge SUV's or very
expensive cars they don't really need but buy just to compete with their neighbours,
to go for those so called expensive vacations where all they do is sit in a
prison that is called a resort. Just because it has some sand and unlimited
food and alcohol does not mean it's not a prison; you have physically and mentally
restricted your movements and the worst part is that you have done this on
a voluntary basis. How can staying in such a prison truly be a vacation; once
again the masses have found away to lock themselves up somewhere out of their
own will. If you truly want to have a vacation your path should be free as
far as the eye can see from every possible direction; a vacation is not a place
where you lock yourself up but open yourself up, a vacation is where you take
your mind away also and not just your body and to do this you have to give
it something new, something to look forward too, perhaps like going to a strange
country and just simply taking in the new sights and mingling in with the natives.

A word to the wise here; if you truly want to become a better trader/investor
then you need to take a real vacation at least once a year and real vacations
usually costs 10 times less than a fake vacation. A real vacation is just going
out somewhere that is open, some where that is new, staying away completely
from resorts and also making sure you spend as little time in the hotel as
possible. You should only use the hotel to shower and for a good nights sleep.
For the most part you should be out and about, interacting with the people,
taking in the new sights, savouring the new food and understanding how these
strangers behave and trying to put yourself into their shoes. If you do this
not only will you have a true vacation but you will immediately open you mind
to new possibilities and that is what investing is all about, the opening
of the mind to new possibilities.

Back to that moment in time when as a child or young adult you truly had moments
that were wonderful; go back to these moments and ask yourself what made them
wonderful and you will find that in most cases it was simple things that money
could never buy. Perhaps it was a lovely picnic or a drive down in the country
side on a nice sunny day with a loved one or even just alone, or trying some
new tasty dish, spending time with good friends and so on. Now notice that
as older adult if and when you have one of these moments of happiness how touched
you are by them, how incredibly good you feel when it happens and when its
over you long for it again but you never try to dig down to ask yourself what
was it that brought it about in the first place. The answer is very simple;
when you stop acting, stop pretending and just allow yourself to be who you
really are without the disguises, the masks, the pretences and so forth you
put yourself into a position where a ray of light can finally break through
the gloom. It's not hard to have a good time it's just hard to see that
it's so easy to do so. This brings us to another TI saying; "life's
simplicity is what makes it so complex" stop trying to learn how to live
a better live and just start to. Tomorrow begins today for tomorrow never really
comes and was not today the tomorrow you worried so desperately about yesterday.
Would it not have been better if today could have been the tomorrow you smiled
about and looked forward to yesterday? We could speak at length on this topic
and probably fill a book with all the points we could make on it; sadly we
do not have the time to undertake such a massive endeavour on such short notice.
The main thing to remember is that happiness is a state of mind and as my late
father Solon Palha used to say "happiness is a mind in peace and hell a
mind in pieces."

We will deal with this concept again in futures issues and expand on it. In
the next update we will also attempt spend more time on dealing with the concept
of mass psychology for its one area we truly love and does not feel like work
when we discus this subject. One brief point to make here is that the field
of psychology has been labelled as the new science; this is a terrible distortion
of the truth. Psychology is one of the oldest sciences out there; its just
that for a long time it existed under different names the primary one being
philosophy.

As they say they history repeats itself over and over again and the past
is actually a window into the future. One good book that's should be
compulsory reading for all traders is a book titled "Michel de Montaigne
- The complete essays". You can pick this up for as little as 10 dollars
from Amazon. This Gentleman was born in the 1500's and his writings display
an incredible amount of insight into the inner workings of the mass mindset.

"Vague and mysterious forms of speech, and abuse of language, have so long
passed for mysteries of science; and hard or misapplied words with little
or no meaning have, by prescription, such a right to be mistaken for deep
learning and height of speculation, that it will not be easy to persuade
either those who speak or those who hear them, that they are but the covers
of ignorance and hindrance of true knowledge." ~ John Locke 1632-1704,
British Philosopher

Sol Palha is a market analyst and educator who uses
Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the
right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

The information contained herein is deemed reliable but
no guarantee is made about its completeness or accuracy. The reader accepts
this information on the condition that errors or omissions shall not be made
the basis for any claim, demand or cause for action. Any statements non-factual
in nature constitute only current opinions, which are subject to change. The
author/publisher may or may not have a position in the securities and/or options
relating thereto, & may make purchases and/or sales of these securities relating
thereto from time to time in the open market or otherwise. Neither the information,
nor opinions expressed, shall be construed as a solicitation to buy or sell
any stock, futures or options contract mentioned herein. The author/publisher
of this letter is not a qualified financial advisor & is not acting as such
in this publication. Investors are urged to obtain the advice of a qualified
financial & investment advisor before entering any financial transaction.